Note Show all of your work to arrive at a final result Use p

Note: Show all of your work to arrive at a final result. Use periodic interest factors in the calculation o NPV and IRR 1. At the end of a tax year, a company has the following data: Gross receipts (sales) Cost of goods sold Tax depreciation Book depreciation Interest on debt $300,000 $50,000 $15,000 $8,000 $10,000 What is the company\'s tax liability (tax) and effective tax rate?

Solution

Gross receipts $300,000 Less: cost of goods sold 50000 Less: Tax depreciation 15000 Less: Interest on debt 10000 Taxable income $225,000 Hence tax liability $71000 22250+(39%*(225000-100000)) effective tax rate 71000/225000*100 31.56 % If rounded off 32%